<if> inside <ul> in pike site?

Judging by the content, I'd say you are working with the pike site, whose templates are often written not to expect rxml content, in this case with an <ul> rule:

<xsl:template match="ul"> <xsl:call-template name="ul"> <xsl:with-param name="contents"> <xsl:apply-templates select="li"/> </xsl:with-param> </xsl:call-template> </xsl:template>

It's probably fixable in /templates/tags.xsl with lots of itchy brain scratching. I think server side xslt causes more pain than joy at the pike site today, though expunging it unfortunately takes quite a bit of work. A site overhaul with mostly html and css would totally rock, but I can't imagine anyone having the time and incitement to do it.